Indian Gold Premiums

Dealers in India, the world's second-largest consumer of the metal, were charging a premium of up to $1 an ounce this week over official domestic prices.

Indian government on Tuesday abolished 500 and 1,000 rupee banknotes to crack down on rampant corruption and counterfeit currency. The surprise move started disrupting cash-based gold smuggling.

Gold premiums in India fell this week as a quick rebound in prices prompted consumers to postpone purchases, but buying interest in China remained strong ahead of the spring festival early next year.

Demand was also reduced by a weak monsoon that has eroded farmers' income. Two-thirds of Indian gold demand comes from rural areas, where jewellery is a traditional store of wealth.

Premiums in Shanghai were $2-$3 an ounce on Monday and last week. Local prices were as high as $7 above the global benchmark earlier this month.

Demand for gold in Japan rose this week as consumers bought ahead of a sales tax increase, although buying was muted in the rest of Asia due to volatile prices, traders and dealers said.

Gold price premiums in India, one of the top buyers of the metal, fell further due to lack of demand even as supplies trickled in from a few importers.

To curb a record trade deficit, India imposed an import duty of 10 per cent on gold, and tied imports for domestic consumption to exports, creating scarce supply of the yellow metal and boosting premiums to a record.

Indian gold premiums hit another record on Thursday, driven by lower supplies to meet firm demand for the wedding season, which will continue till April. Local prices were $150-160 an ounce higher than London prices, compared with $125 earlier this week, traders said.

Faced with high premiums to secure scarce supplies of gold, relatives and guests at Indian weddings are having their old heirlooms melted down to be reused as traditional presents.

Gold's drop to a four-month low this week attracted buyers in Asia but dealers were doubtful the demand would last as consumers may be waiting for the market to go even lower. In India, despite muted demand, premiums jumped to $120 an ounce from $80 last week because of a supply crunch caused by government restrictions on imports.

India celebrated Dhanteras, the biggest gold buying festival, and Diwali earlier this month, when scarcity of the yellow metal and high prices pushed consumers to buy silver and diamond jewellery.

India's imports of gold have halted since July 22, sending premiums for scarce stocks soaring, as traders in the world's biggest bullion buyer try to puzzle out new central bank rules that tie imports to export volumes.

Indian gold futures jumped more than 1 per cent on Thursday aided by a weaker rupee and firm global trends, while premiums on physical gold eased due to some supply from bullion importing agencies.

In Mumbai, premiums for gold bars jumped to their highest in two years at $10 an ounce to the spot London prices due to rising demand. Gold jewellery forms an essential part of gifts at Indian weddings and festivals.

Dealers in India, the world's second-largest consumer of the metal, were charging a premium of up to $1 an ounce this week over official domestic prices.

Indian government on Tuesday abolished 500 and 1,000 rupee banknotes to crack down on rampant corruption and counterfeit currency. The surprise move started disrupting cash-based gold smuggling.

Gold premiums in India fell this week as a quick rebound in prices prompted consumers to postpone purchases, but buying interest in China remained strong ahead of the spring festival early next year.

Demand was also reduced by a weak monsoon that has eroded farmers' income. Two-thirds of Indian gold demand comes from rural areas, where jewellery is a traditional store of wealth.

Premiums in Shanghai were $2-$3 an ounce on Monday and last week. Local prices were as high as $7 above the global benchmark earlier this month.

Demand for gold in Japan rose this week as consumers bought ahead of a sales tax increase, although buying was muted in the rest of Asia due to volatile prices, traders and dealers said.

Gold price premiums in India, one of the top buyers of the metal, fell further due to lack of demand even as supplies trickled in from a few importers.

To curb a record trade deficit, India imposed an import duty of 10 per cent on gold, and tied imports for domestic consumption to exports, creating scarce supply of the yellow metal and boosting premiums to a record.

Indian gold premiums hit another record on Thursday, driven by lower supplies to meet firm demand for the wedding season, which will continue till April. Local prices were $150-160 an ounce higher than London prices, compared with $125 earlier this week, traders said.

Faced with high premiums to secure scarce supplies of gold, relatives and guests at Indian weddings are having their old heirlooms melted down to be reused as traditional presents.

Gold's drop to a four-month low this week attracted buyers in Asia but dealers were doubtful the demand would last as consumers may be waiting for the market to go even lower. In India, despite muted demand, premiums jumped to $120 an ounce from $80 last week because of a supply crunch caused by government restrictions on imports.

India celebrated Dhanteras, the biggest gold buying festival, and Diwali earlier this month, when scarcity of the yellow metal and high prices pushed consumers to buy silver and diamond jewellery.

India's imports of gold have halted since July 22, sending premiums for scarce stocks soaring, as traders in the world's biggest bullion buyer try to puzzle out new central bank rules that tie imports to export volumes.

Indian gold futures jumped more than 1 per cent on Thursday aided by a weaker rupee and firm global trends, while premiums on physical gold eased due to some supply from bullion importing agencies.

In Mumbai, premiums for gold bars jumped to their highest in two years at $10 an ounce to the spot London prices due to rising demand. Gold jewellery forms an essential part of gifts at Indian weddings and festivals.